Circular procurement: strategies for building the principles of sustainability and the circular economy

Posted on Aug 16, 2023 at 12:08 AM

The concept of circular procurement has become a beacon of hope for enterprises striving to transition towards a circular economy that prioritises sustainability and progress. But what exactly is circular procurement? What are its principles, advantages, and disadvantages, and how can it be effectively implemented? This article delves into these questions, guiding you through the intricacies of circular procurement.

What is Circular Procurement?

At its core, circular procurement is a manifestation of circular economy principles in the procurement realm. It involves a set of processes that align with circular economy principles and constitutes a critical element of a broader sustainable procurement strategy for every organisation.

• Circular procurement revolves around two pivotal aspects:

1- Enhancing Circular Supply Chains: This involves sourcing sustainable circular products, materials, and services, thus strengthening the foundation upon which circular supply chains are built.

2- Advancing Modern Business Models: Circular procurement drives the adoption of circular products and fuels innovation within modern business models, encouraging creative resource solutions in both the public and private sectors.

Designing and executing an effective circular and sustainable procurement strategy requires comprehensive guidelines and principles. These guidelines help define the scope of work, facilitate seamless integration with existing processes, simplify planning, prioritise enhancement procedures, and underscore the commitment of stakeholders to these strategies.

• The application of these principles can be observed across various levels of procurement:

System Level: Companies can collaborate with stakeholders, including public-private partnerships, supplier recovery systems, and other organisations, to identify critical purchases and establish partnerships that bolster circular practices.

Supply Level: Integration of circularity can be facilitated through better supplier information exchange, internal reuse of valuable products, and designing products with disassembly in mind.

Product Level: Embracing circular procurement involves promoting the use of recycled, sustainable, and recyclable materials, as well as designing products for efficient dismantling after use.

Implementing Circular Procurement Strategies

The integration of circular and sustainable procurement strategies within organisations demands careful consideration of various factors:

1. Sustainability Integration: In-house training and development programs focusing on sustainability can ease employees' understanding and acceptance of the new strategy. Procurement courses in London offer valuable insights.

2. Resource Impact: Vigilance regarding resource impacts on operational processes is essential to gauge the appropriateness and support required for strategy implementation.

3. Operational and Strategic Delivery: Successful strategy implementation requires effective delivery across operational and strategic levels.

4. Internal Commitment: Creating internal commitment to the new strategy is crucial to ensure its adoption and success.

5. Identifying Necessary Changes: Identifying business practices that need to be revamped is critical in aligning with circular procurement principles.
   

However, implementing a new business strategy has its challenges. Obstacles will mark the journey, but several tips can pave the way to success:

• External Expertise: Collaborating with NGOs and experts can provide unique insights and enhance the credibility of sustainability efforts.

• Quality Relationships: Prioritizing the quality of relationships over quantity fosters better collaboration.

• Clear Commitment: Deploying the circular procurement strategy with clarity and commitment is critical.

• Top-Level Support: Ensuring management, senior staff, and influential individuals wholeheartedly support the strategy.

• Supplier Engagement: Engaging with suppliers for more sustainable supply options is essential.
  
  

Advantages of Circular Procurement Strategies

The adoption of circular procurement strategies yields numerous benefits, regardless of a company's size or type – whether private, public, small, medium, or prominent:

• Resource Reduction: Circular strategies focus on reducing the use, reusing, and recycling of raw materials, leading to more sustainable practices.

• Comprehensive Management: Circular procurement involves all supply chain stakeholders, from suppliers to end products.

• Solution-Oriented Approach: Circular procurement prompts questions that lead to innovative solutions, like identifying opportunities, preferred suppliers, and long-term relationships.

• Financial Incentives: Circular solutions can include financial incentives that stimulate supplier turnover and knowledge sharing.
  
  

In addition to these benefits, circular procurement brings about the following:

• Reduced Business Disruption: Environmental, economic, and social impacts are minimised, contributing to smoother operations.

• Enhanced Reputation: Circular procurement improves brand value and reputation.

• Cost Savings: Efficient resource use translates to reducing manufacturing costs.

• Effective Resource Utilization: Natural resources are harnessed more effectively.

• Innovation Promotion: The supply chain sees increased innovation, and alternative waste management methods are considered.

Disadvantages of Circular Procurement Strategies

While the benefits of adopting circular procurement strategies are substantial, there are also drawbacks to consider:

1. Supply Chain Cooperation: Successful implementation relies on collaboration throughout the supply chain.

2. Resistance: Some companies may resist changes associated with circular procurement.

3. Initial Costs: Developing circular procurement practices can require significant initial investments.

4. Resource Demands: Staying updated on evolving standards necessitates ongoing training and resource allocation.

5. Transition Challenges: A smooth transition to circular methods demands substantial education and preparation.

Conclusion

Embracing circular procurement is akin to embarking on a journey towards enhanced risk management, efficient collaboration with suppliers and developing innovative solutions. By integrating circular practices into their business policies, companies can unlock many benefits that echo throughout their operations and contribute to a more sustainable and prosperous future.